Changing Your Mind After Retirement

Retirement is a milestone achievement, and it’s often a challenge to settle on the right time to leave the workforce.

Many people even change their minds and decide to “unretire” after a few months or years, whether to find fulfillment from working or add to their income stream.

Of course, coming out of retirement comes with particular financial considerations. If you decide to take this step, be sure you know what to expect.

For example, going back to work could impact your:

Taxes — When you go back to work, you will be taking home more than your passive income. This additional money could bump you up a tax bracket, which would mean paying more in income taxes.

Insurance — Depending on your age, you may already have Medicare coverage. If you accept a full-time position, you might have access to company-sponsored healthcare. If you decide to opt into employer-sponsored insurance, you’ll need to figure out how the coordination of benefits works. Also, keep in mind that you cannot contribute to a Health Savings Account (HSA) if you have Medicare.

Social Security — If you’re considered below full retirement age, going back to work may result in part of your Social Security benefits being withheld. If you decide to return to work within a year of retiring, you have the option of paying back any benefits you have received and applying for full Social Security benefits later.

Retirement Accounts — Going back to work may allow you to contribute to a current employer-sponsored retirement account. And don’t forget about your required minimum distributions (RMDs). Just because you go back to work does not mean you can skip taking RMDs on certain types of retirement accounts. If you do, you could face a tax penalty. 

Do you have questions about managing your finances before and after retirement? Reach out today.